When is Environmentalism Good for the Environment?

Abstract We study how the supply of environmentalism, which is defined by psychic benefits (costs) associated with purchase high-environmental (low-environmental) qualities, affects way firms choose their prices and products ensuing consequences for global level pollution. Contrary to general belief, a high environmentalism does not necessarily give rise better environmental outcome because it endows green more market power they use charge higher prices. Nonetheless, can be used effectively complement traditional policy instruments such as minimum standard.